12/11/2000 @ 12:00AM

The Daily Defendant

I T’S NOT A BAD DAY JOB. AS WARREN BUFFETT’S right-hand man and chief bean counter, mild-mannered Charles Munger pulls down $100,000 in salary and has $1.2 billion worth of Berkshire Hathaway stock. But what really gets Munger’s juices going is his other, lesser-known avocation:dragging pesky legal opponents through the courts-then driving a spike through their hearts by winning costly victories.

For Charlie Munger is a guy who just loves the law. A Harvard-trained lawyer, he’s the founding partner of the Los Angeles firm of Munger, Tolles and Olson, and also owns the Daily Journal Corp., a Los Angeles-based publisher of 19 newspapers, many of them legal titles. “Charlie doesn’t own the Journal to make money,”says Steven Brill, the former chief executive of American Lawyer Media. “He just likes owning it. I’d be surprised if he reads half of it after it’s published.” Perhaps. But Munger undoubtedly gloated last month after a California Supreme Court judge sided with him after a four-year battle. Munger had contested allegations that his company undercut competing sheets owned by Metropolitan News by selling notices of foreclosures below cost to customers like Fannie Mae and Wells Fargo (Berkshire Hathaway is a longtime investor in Wells Fargo).

In June Metropolitan News owner Roger Grace appealed a jury verdict that sided with Munger, looking for more than $10 million in damages. The case finally was resolved in late October in Munger’s favor. The verdict was hardly vindication for this belabored case. Years of lawyerly machinations resulted in more than 340 motions, briefs and petitions filed by both sides. Wouldn’t it have been cheaper and more expedient for Munger to settle? Or just buy Metropolitan News with pocket change and fire Grace? Probably. But for the 76-year-old Munger this was sport. When a judge ordered both sides in for a powwow last year, Munger refused to negotiate face-to-face.

“For three days my wife and I sat in a room by ourselves while a mediator talked with Munger,” fumes Grace, who claims that on the third day Munger offered to settle for $4.5 million over 15 years, on condition that Grace turn his largest newspaper, the Metropolitan News-Enterprise, into a weekly political newsletter. No way, said Grace. No comment from Munger.

This isn’t Munger’s first dance in court. In 1995 he was a named defendant in a $4.6 million lawsuit filed by Jeffrey Barge, a former newspaper owner from New York, who claimed that a Daily Journal executive feigned interest in buying his Seattle paper in order to obtain confidential information to launch a competing paper. More than five years later a judge ruled with Munger. Last year Daily Journal invested $6.7 million in a Newport News, Va. software company that enables courts and lawyers to file cases electronically and publish information online. That could mean more exposure for a company primarily relegated to the West Coast.

But it also puts Munger squarely at odds with national legal publishers like American Lawyer. Just think of the possibilities: Competition! Munger’s firm as acquisition fodder! Lawsuits!